Dubai and Abu Dhabi were ranked the 21st and 25th most expensive cities for foreign workers to live, according to Mercer's 2016 Cost of Living Survey released on Wednesday.

Dubai with its 2.5 million inhabitants saw a rise of two places in comparison to last year. Abu Dhabi (1.5 million people) changed from 33rd place last year to 25th, despite a slump in oil prices, Xinhua reported.

"The two UAE cities have experienced a rise in their world rankings in this respect following the wider ... trend of Gulf Arab countries becoming more expensive," said the report.

All Gulf Arab economies, with the exception of Kuwait, have pegged their currencies to the greenback.

The costs of living increased in recent months in the UAE after the government cut a number of subsidies and introduced new fees for living and doing business to cushion the fall of oil revenues.

Economies in the Gulf region witnessed a slowdown in growth in the last six months due to the ongoing slump in the price of oil.